In a sharp twist to a rapidly evolving trade policy, President Donald Trump has announced a 90-day pause on heightened US tariffs for most trading partners, even as the tariff war with China reaches new highs. This dual approach signals a strategic recalibration in Washington’s trade offensive, aiming to cool global market anxiety while doubling down on Beijing.
Last week, Trump stunned the global economy by setting a baseline 10% tariff on all imports, with higher rates for countries accused of unfair practices. Among them were the European Union, Vietnam, and South Africa, each facing potential levies ranging from 11% to over 100%. The result was immediate market turmoil. Stocks plummeted, interest rates on US government debt spiked to 4.5%, and recession fears re-emerged.
But markets rebounded dramatically on news of the 90-day pause. The S&P 500 surged by 9.5%, while the Dow jumped 7.8%. Trump’s move calmed concerns for many American businesses and allies, though it did little to mask the intensifying confrontation with China.
Beijing, after retaliating with an 84% tariff on US goods, was hit with a sweeping 125% US tariff. Trump defended the move, citing China’s “lack of respect” and reiterating that trade imbalances and theft of intellectual property could no longer be tolerated. “It’s not sustainable or acceptable”, he said on Truth Social. Treasury Secretary Scott Bessent downplayed suggestions the reversal was due to market losses, but the optics suggest otherwise.
Trump’s message was clear: allies who refrain from retaliating may be spared harsher penalties. China, however, remains in the crosshairs. The administration’s hardline stance is also drawing political fire. Senate Democrat Chuck Schumer called it evidence that Trump was “reeling and retreating”, while others saw it as a sign of an impulsive economic agenda destabilizing global commerce.
China has responded with defiance, labelling the tariffs “abusive” and an act of “bullying”, warning that the US must act with “equality and mutual respect” if it wants negotiations to succeed. The impasse has the potential to severely impact bilateral trade, up to an 80% drop, per WTO estimates, translating to a $466 billion contraction.
For other countries, especially those yet to retaliate, the pause offers a short-term reprieve. The EU, for example, had planned retaliatory tariffs but is now temporarily capped at the 10% base rate. Canada and Mexico remain excluded altogether, an acknowledgment of their strategic trade ties with the US.
However, several tariffs remain in force. These include a 25% duty on car and car part imports and another 25% on steel and aluminum, both critical to multiple industries. These measures show that while Trump may be easing global pressure, his protectionist instincts remain intact.
As the world watches the US-China standoff escalate, the broader implications of America’s evolving trade doctrine are becoming clear: the rules are being rewritten, unpredictably and unilaterally. While some nations breathe easier, others brace for impact. The next 90 days will be pivotal not just for US-China relations, but for the future of global trade itself.
